The effects of mandatory non-financial reporting on financial performance. A multidimensional investigation on global agri-food companies

Focusing on the Agri-Food & Beverage sector, the paper investigates the direct effect of worldwide mandatory non-financial disclosure on several financial dimensions as well as its moderating effects on the relationship between sustainability and financial performance. We performed fixed-effect regressions on a sample of 180 globally listed companies, considering a period of eight years. We also tested the moderating effects of non-financial disclosure regulation on the relationship between sustainability and financial performance. We found a positive direct impact of mandatory non-financial disclosure on Operating Return on Assets, Return on Equity and Return on Sales. The analysis also highlighted the negative moderating effects of non-financial reporting regulation on the relationship between sustainability issues and financial performance. As for the Cost of Debt, we found mixed results. This study considers a short-term perspective focusing on a limited sample composed of companies playing a key role in the global agri-food system. Moreover, the paper identifies which financial performance dimensions are positively or negatively affected by mandatory non-financial disclosure. Accordingly, managers can rearrange corporate activities to deal with further reporting normative requirements while concurrently preserving financial performances and fostering corporate sustainability. Furthermore, this study recommends fostering mandatory non-financial disclosure to increase corporate transparency fostering the sustainability transition of the Agri-Food & Beverage industry. Finally, the paper highlights global mandatory non-financial disclosure effects on financial performance considering a sector that is cross-cutting impactful on plural sustainability issues.